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Unorganised sector refers to those enterprises whose activities or collection of data is not regulated under any legal provision or do not maintain any regular accounts. In the unorganised sector, in addition to the unincorporated proprieties or partnership enterprises or partnership enterprises, enterprises run by cooperative societies, trust, private and limited companies are also covered. The informal sector can therefore, be considered as a sub-set of the unorganised sector. Informal sector in India is broadly characterized as consisting of units engaged in the production of goods and services with the primary objectives of generating employment and incomes to the persons concern. These units typically operate at low level of organisation, with little or no division between labour and capital as factors of production and on a small scale. Labour relations, where they exist, are based mostly on casual employment, kinship or personal or social relations rather than contractual arrangements with formal guarantees. Thus, production units in informal sector are not constituted as separate legal entities independently of the household or house hold members that own them and for which no complete sets of accounts are available which would permit a clear distinction of the production activities of the enterprises from the other activities of their owners. The owners of their production units have to raise the finance at their own risk and are personally liable, without limit, for any debts or obligations incurred in the production process. Expenditure for production is often indistinguishable from household expenditure. For statistical purpose, the informal sector is regarded as a group of production units, which form part of the household sector as household enterprises or equivalently, unincorporated enterprises owned by households. In India, the term informal sector has not been used in the official statistics or in the National Accounts Statistics (NAS). (http://labour.nic.in/ss/INFORMALSECTORININDIA-approachesforSocialSecurity.pdf) http://timesofindia.indiatimes.com/videos/news/Truck-driver-beaten-to-death-for-not-paying-bribe/videoshow/10125209.cms; Reference to speck of former President of India A.P.J.Abdul Kalam on the incident. (www.abdulkalam.com )

Role of Good Governance Practices

1.
Presentation by
Dr.K.Prabhakar,
Professor
Universitat Passau
The Economics of Corruption: Seeking
Nudges for Reforms
Role of Good Governance Practices and Native
Intelligence to Reduce Corruption in Truck
Industry
1/10/20141

3.
Fact Sheet
 Second largest employer after agriculture in India. (11% of
population work in this sector both directly and indirectly).
 87.5% of total goods transported in India are through
trucks spanning 42.36 lakh kilometers roads of which only
1.7% is national high way.
 The ownership of trucks is predominantly with small
operators owning not more one or two trucks (85% as per
the records of All India Motor Transport Congress Report.
 The industry is considered as an unorganized sector and
informal sector.
 Industry is financed to the extent of 1,60,000 crores (27
billion $) is from private financiers and not from banks.
 Approximately 35,000 crores (6 billion $) is paid as bribes
every year at different check posts.
 The legal framework is given in the year 1884 .
1/10/20143

4.
Motivation
 what makes this industry survive despite its inherent
contradictions and perennial issues with law
enforcement agencies and rent seeking politicians
with resists any legal framework?
 How should we describe this industry with no one is
able to influence the prices with large number of
suppliers and buyers- economists dream of free
competition?
 In a similar vein is it possible for a person like
Shanmugappa to bring about a change that has not
moved the state for 149 years?
 Shanmugappa’s organization has no characteristics
of a modern organization. Yet it is globally competitive
supplying to 40 countries across the world.
 If there are some other models what is the theoretical
basis for the same? 1/10/20144

5.
Artificial Economics
 The seminal work by Batten (2000) on Discovering Artificial
Economics an analogy is provided to that of sand piles.
The common example of reaching equilibrium at the
intersection of demand and supply curve may not explain
the complete picture of how decisions are made. The
decisions by human agents tend to be discrete, like grains
of sand are not continuous and it is the same case with the
prices.
 Buying or selling goods happen only when the need arises
or the opportunity of a bargain presents itself, remaining
passive in between. There is no continuous adjustment of
goods in response to fluctuations in the market.
 In other words, there's plenty of friction in real economies,
similar to sand piles. It is like the friction of distance that
binds villages, towns, and cities together in special
patterns to form a stable, yet dynamic, economy. It is also
friction that prevents a sand pile from collapsing
completely to a flat state. It may even be responsible for a
special kind of dynamic equilibrium.
1/10/20145

6.
Self Organized Systems
 There may be an argument that economic agents can think but
grains of sand have no thinking capability. An examination of
sand piles behaviour provides better understanding of
phenomena. The following experiment may be tried. Starting
from scratch on a flat base, a pile is built up by randomly adding
sand at the centre; slowly and carefully, a few grains at a time.
 We will notice how the grains tend to stick together. The peaked
landscape formed by the sand doesn't revert automatically to the
flat state when no more sand is added . Static friction keeps the
pile together. Gradually it becomes steeper. Then a few small
sand slides start to occur. One grain lands on top of others and
topples to a lower level, causing a few other grains to topple over
it. In other words, that single grain of sand can cause a local
disturbance, but nothing dramatic happens to the pile as a
whole.
 At this formative stage, events in one part of the pile have no
effect on other grains in more distant parts of the pile. We might
say that the pile is only weakly interactive, featuring local
disturbances between individual grains of sand. As you add more
grains and the slope increases, however, a single grain is more
likely to cause a large number of others to topple.
1/10/20146

7.
Invisible Choreographer ?
 It is not invisible hand, but it is the invisible
choreographer who will be able to add few sand
grains that is likely to cause avalanche. This is what is
being done by an individual that will change the
course of the world.
 Stuart Kauffman (1993) of Santa Fe Institute scientist
and devout advocate of self-organization, argues that
this kind of emergent order seems to be the work of
an "invisible choreographer." An ordered pattern has
sprung up from nowhere. The relevance of this
discussion is apply the concept of Shanmugappa and
his team of people who can become invisible
choreographers to change the system to bring about
the required avalanches in the sand pile of corruption,
inefficiency that is plaguing the industry? Arab spring,
Occupy Wall Street, Anna Hazare movements
choreographed by few people has brought about
phenomenal changes in the thinking of the people. Is
1/10/20147

8.
The qualitative phenomenological
method
 The qualitative phenomenological method is likely
to be appropriate as it is more oriented towards
discovery.
 This approach relies on information that is
dependent on the individual perceptions and
interpretations of a subjective reality they have
created ( Arbnor & Bjerke, 1997). Thus, the actor
paradigm perceives reality as a manifestation of
human intentionality.
1/10/20148

12.
Jeremy Narby (2005)
 Scientists have discovered that humans are not
the only intelligent beings around. The field of
animal intelligence is expanding and plant
intelligence is considered a scientific discipline.
Anthropologist Jeremy Narby (2005), who
interviewed scientists investigating smart slime,
brilliant bees, perceptive plants and other living
wonders gave a clear articulation in his work.
 Narby posited that Western scientists are
beginning to uncover two facts of life that
indigenous shamans have known for millennia: All
of nature teems with intelligence and all life is
interconnected. 1/10/201412

13.
Jeremy Narby
 As an anthropologist who has studied both Western
scientists and Amazonian shamans, Narby is bringing
together these two knowledge systems. To Narby's way of
thinking, rationalism has been the sole driver of the pursuit
of knowledge for far too long, with devastating
consequences. "The emphasis on technology,
commodities and fragmented rational knowledge has bled
the world of meaning," he says. At the same time, Western
culture has drawn a line so deep between humans and
nature that it's embedded in language.
 Intelligence and nature are mutually exclusive by
definition.
 Narby says scientists lack adequate language to describe
and deepen their discoveries about the intelligence and the
unity of life on Earth. Indigenous people's knowledge
systems and cultures, on the other hand, tend to view all
beings as sentient and related in a world with no
separation between humans and nature. Such
understanding, combined with western science, could
1/10/201413

14.
Organization and its
characteristics
 He created a strong base in the form of five organizations that provide
livelihood for 1200 people, which was his dream.
 He is not number driven or profit driven and never thinks that he will
make a loss. His view is if his focus is on being honest to himself and to
the society it will reward him with profits.
 He does believe that as CEO he need to be frugal. He spends what is
required for him. The rest he says it is for his workers and for the
society.
 An organization strongly believes in intuition rather than in systems or
processes. There is no hierarchies and everyone is treated the same.
 He radically trusts people and never on the wrong side of the law.
 The organization has no written mission and vision statements, but
achieved world class manufacturing practices and designed machinery
with the help of workers who had little formal education.
 He is deeply religious and not apologetic about it and has employees
from all religions.
 Strong belief in ethics and values and commitment to anti corruption.
 Every employee is made to feel a strong sense of identity with the
organization as well as works with great pride, which is visible from the
security staff to the senior managers. 1/10/201414

15.
Native Intelligence
 While animals and plants can have intelligence
and act according to their own needs optimally as
given by Narby (2005), a non formal educated
person, with a strong sense of commitment to
society driven by values leverage native
intelligence and achieve excellence. Thus he
describes as a native intelligence achiever.
1/10/201415

16.
Nudge
1/10/2014
 The All India permit used to cost 1,35,000/- with
only 8,00,000 truckers with licenses. While
25,00,000 truckers are operating. Revenue to
government 850 crores.
 All India permit to cost 15,000/-. 20,00,000
truckers accepted and the revenue to the
government is1350 crores.
16

17.
Discussion
 Questions are the same, but answers are
different.
1/10/201417